Finance Ministry says SEBI nod not needed for ULIP sales

A man shows balloons in the colours of the Indian flag to his child at a market during Independence Day celebrations in Chandigarh August 15, 2008.
REUTERS/Ajay Verma/Files

NEW DELHI The finance ministry said on Saturday life insurers could sell unit-linked insurance plans (ULIPs) without seeking a nod from the capital markets regulator, ending a spat between regulators over the hybrid products.

The presidential decree permitting such sales went into force late on Friday, the finance ministry said in statement. Under the law, such orders issued when parliament is not in session must be confirmed by lawmakers in their next sitting.

The capital markets regulator and the insurance regulator had locked horns on who should regulate ULIPs, mutual fund instruments with an added life cover, given the products combined insurance and investments.

The Securities and Exchange Board of India (SEBI) had in April barred 14 life insurance companies from selling ULIPs without its approval. The Insurance Regulatory Development Authority (IRDA) argued SEBI had no authority to do so.

After the finance ministry intervened, the two decided to maintain the status quo.

"Life insurance business shall include any Unit Linked Insurance Policy or scripts or any such instruments. This would set at rest all the issues regarding ULIPs between two financial regulators," the finance ministry said in the statement.

Parliament will next meet for the monsoon session, which generally starts in July.

MUMBAI State Bank of India has agreed to sell a 3.9 percent stake in its life insurance arm to affiliates of KKR and Temasek for 17.94 billion rupees ($266 million), the nation's biggest lender said on Friday.